Pension scheme in Austria

• Author: Greta Alikaj, Endri Papajorgji
• Position: Albanian Ministry of Economic Development, Tourism, Trade and Entrepreneurship - Dean of the Faculty of Law of TBU (Tirana Business University)
• Pages: 274-278

ISSN 2410-3918

Academic Journal of Business, Administration, Law and Social Sciences

Vol 1 No 2

Acces online at www.iipccl.org

IIPCCL Publishing, Tirana-Albania

July 2015

Pension scheme in Austria

MSc Greta ALIKAJ

Albanian Ministry of Economic Development, Tourism, Trade a nd Entrepreneurship

Prof. assoc. Dr. PhD (Uni Graz) Mag. Iur (Uni Graz) Endri PAPAJORGJI

Dean of the Facu lty of Law of TBU (Tirana Business University)

Abstract

Driven by unfavorable demographic developments and unsustainable, outdated or fragmented

systems, pension reform has been at the top of political agendas across the globe for many years

now (Prinz, Stanovnik & Stropnik, 2000). Over the last two decades, almost all western

European countries have been trimming their public pension systems in an effort to strengthen

pension sustainability. One main target of reform was to increase the retirement age. Other

measures (e.g. changing the pension calculation, broadening the assessment base, changing the

adjustment mechanism) were designed to lower replacement rates. The reform process in the

wide range of countries addressed by this survey differs considerably from country to co untry.

This is why Allianz first introduced the Pension Su stainability Index (PSI), which combines the

various characteristics of pension systems with the factors that influence them to help track and

evaluate policy changes made in different countries aro und the world. In addressing the

sustainability of a country’s public pensio n system, the PSI can give an indication of a country’s

need for reforms to maintain long -term financial sustainability. This can be difficult to assess

given the many country-specific institutional, technical and legal parameters. The PSI is able to

evaluate the long-term sustainability of national pension systems and thus the pressure on

governments to reform these (International pension Papers, 1.2014).

The speed of reform, however, differs between countries. T hose which recently introduced

major reforms were able to improve in the PSI ranking because of active steps taken, while

others were lost in comparison due to their passive policymaking.

Keywords: Population Ageing, Pension, Public F inance Sustainability, Social Insurance, Retirement.

Introduction

Austria pursues comprehensive social policies based on a wide range and dense

network of duly coordinated social benefits and services (Oesterreichisches Sozial

Ministerium, 2014). Compared with other European countries, these benefits and

services are very well developed and greatly help to cushion the still-felt impact of the

economic and financial crisis as well as its social and economic consequences for those

groups of the population that were and are particularly affected by them. Rising

expenditure on labor market and anti-poverty policies in combination with consistently

high family, health and pension benefits are major contributors in reducing the risk of

poverty and marginalization in Austria: the percentage of the Austrian population at

risk of poverty, which is below the EU average, would be more than three times as high

were it not for these social benefits (Oesterreichisches Sozial Ministerium, 2014).

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